Marketing Audit Report for MAC COSMETICS - Essay Example

Marketing audit report for MAC COSMETICS Table of Contents Table of Contents 2 Introduction 3 Mission statement 3 Financial summary 4 Marketing mix 4 Brands 6 Marketing research 6 PESTEL Analysis 7 SWOT Analysis 8 Competition 10 New product Idea 11 Marketing objectives 12 Marketing Strategy 12 Segmentation, targeting and positioning 13 Reference 13 Introduction Marketing can be defined as the achievement of corporate goals through ensuring the operations meet and exceed customers’ needs better than the competition (Fahy & Jobber 2012). Marketing for different products provided by different companies within the same industry is conducted with the aim of beating the competitors through the market share, and achieving high profits for the organisation. The development of a strategic marketing plan is essential in ensuring that the products of company are able to compete effectively within the market. Competitive markets require organisations operating within the industry to adopt intensive marketing strategies to ensure that they compete effectively within the market. This report presents a marketing report for Mac Cosmetics, a company operating within the highly competitive global cosmetic market. An analysis of the various operational aspects that are involved in ensuring the company competes effectively is presented within the context of this report. These include the mission statement, which declares the purpose for existence of Mac, through the marketing mix to the analysis of competitors. The business environment within which the company operates has been analysed in seeking to enhance the understanding of how the company has achieved a competitive advantage within the highly competitive global cosmetics industry. Mission statement The mission statement of an organisation can be defined as a brief statement that defines the purpose for establishing the business, while identifying the reasons behind the existence of the company (Fahy & Jobber 2012). The mission statement for the company seeks to provide products which fit to individuals of different demographic states. Within the mission statement of the company it states clearly the goals which the company seeks to achieve and the responsibilities of the company to the customers. The mission statement is important to the company because it establishes the direction of the company in terms of defining the goals and targets which the company is working towards achieving. The elements contained within the mission statement give clear objectives of the targets which the operations of the company seeks to achieve through sales. Another fundamental function of the mission statement is communicating the responsibilities of the company to the public. This includes informing the general public, industry partners, consumers and other stakeholders of the purposes for existence of the company. Financial summary A financial summary is a report which presents which creditors, investors and other stakeholders of the company utilise in evaluating the financial performance of the organisation (Revsine et al. 2011). The summary is also utilised by the management of the organisation in communicating the financial information of the company to the various outside parties which are interested in the organisation. The summary provides information pertaining to the financial conditions prevailing within the organisation, which are significant importance to creditors and investors. The investors, who are the providers of capital must be able to the financial performance of the company in order to monitor the profitability of their investments (Maynard 2013). The summary helps the investors and creditors to understand how the company has been utilising the financial resources which are available to the organisation. It presents a report of the financial results which indicate profits and losses which have been achieved from the operations. Marketing mix Marketing mix refers to a business tool utilised in establishing a market for products of a company being produced within a competitive industry. The marketing mix tool has four elements which are balanced by an organisation in achieving competitive advantage within a market (Kotler & Armstrong 2013). The application of the marketing mix concept enables organisations to present products which meet the market requirements. The four elements include the following Product – MAC provides a wide variety of products into the market ranging from soaps to other cosmetics. The company has been able to differentiate the products which it provides to the market through the unique packaging and availability of different brands of a single product from the same company (Huang & Sarigöllü 2012). Mac offers liquid foundation in 32 shades compared to Bobbi browns 15 shades for the same product, providing its customers with a variety. Place – this refers to the ability for customers to find products of a company, determined by the distribution channels of the company. The company provides almost all the available products to the global market. The distribution channels have ensured that all the products are available in the global market Price – the pricing strategy which has been adopted by MAC has been one of the fundamental elements which have made the company to become a market leader within the industry, despite the intense competition existing within the market. The liquid foundation sold by MAC goes for £19.50 while that offered by Bobbi brown sells at £ 27. This makes the MAC brand to become relatively popular within the same market. Promotion – the company undertake extensive marketing through online means and other forms of electronic media to ensure that the target clients have been informed about MAC products within the market (Mullin 2010). Brands A brand is defined as a sign, name, term, symbol or a combination of these elements which is intended to create an identity for a product. This identification of goods through brands is important in differentiating products offered by a company from the products of another company (Tungate 2008). The fundamental purpose for branding is making the customers to perceive the company as the only one providing a solution to their needs. A good brand will enable the company to achieve the following objectives Confirming product credibility Motivating the buyer Creating customer loyalty In seeking achieve the above branding objectives, the company must first understand the needs of the customers as well, as the company prospects. This is because the brand resides in the heart of clients, customers and prospects (Kapferer 2012). A brand becomes an invaluable asset as the completion within the market for customers intensifies Marketing research A market research refers to the efforts which companies make in seeking to gather information about the target market or customers. It is one of the fundamental factors which are utilised in gaining a competitive advantage within any market. This is because it provides information which can enable the organisation to identify and analyze the needs of a market in seeking to provide products which satisfy these needs (Zarantonello & Schmitt 2013). A market research can either be primary or secondary. Primary research is developed by a company in seeking to understand specific parameters of the market which the company requires and considers important to its marketing needs. Secondary research on the other hand will rely on published information from industry regulators and other such organisations. PESTEL Analysis This is a business concept which is utilised in marketing by different companies to track the business environment within which they are operating to understand the various operational requirements of the organisation. The analysis seeks to establish the political, economic, social, technological, legal and environmental factors which could influence the business operations. This analysis provides the whole picture of the business environment while the organisation is contemplating certain plans or business ideas. Political – these are factors which are related to the level of government intervention in the businesses. As an organisation conducting business operations globally, political aspects are importance since there are different regulations across different countries yet the organisation must adhere to them. These include labour laws taxation and other regulatory issues within the business environment. Economic – this involves assessment of the factors within the economy which could impact business operation decisions. They would include the interest rates, taxation levels of inflation among other key determinants of economic situation within a market. The exchange rate for example remains one of the most important elements when conducting global business (Axarloglou 2007). Social – these include cultural elements which determine how people perceive the products being provided with a market. Within the cosmetics industry the fashion trends are key social factors which must be considered in understanding the business environment in which companies like Mac operate. Technological – these are factors which concern the application of latest technology in the various business operations. This would include the technological elements in the production and even marketing of the company. It is essential for the company to utilise technological approaches in undertaking business to ensure that the costs of doing business are level with the competition within the market. Legal – these are the various laws and regulations which exist within different countries in order to assess how the legal aspects could affect the business operations within the organization. The organisation must ensure it operates within the legal framework of the different markets where the products are being sold. Environmental – there are various environmental issues like weather and climate changes which could affect the kind of cosmetics which people use. Consideration of such factors becomes critical towards understanding the needs of customers based on the environmental requirements. SWOT Analysis The SWOT analysis is essential in analysing the business environment upon which the company operates. The fundamental purpose for undertaking this analysis is to determine the positive and negative elements within the business environment. Such understanding becomes critical in ensuring the business maximises the positive attributes which adopting approaches to mitigate the effects of the negative attributes which are present within the environment. Assessment of the internal environment include the following aspects Strengths These are the internal factors which provide the company with an advantage over other industry players within the market Weaknesses These are described as the internal elements which place the company at a disadvantage compared to the other organisations within the same market Opportunities They are the external factors within the market which the organisation can utilise to gain a competitive advantage Threats These are external factors which make operations of the company to experience difficulties. Strengths The company has a strong parentage which ensures that there is a strong brand equity within the organisation There is a strong brand portfolio Effective distribution channels which ensures that the products reach the target markets. Excellent market research and new product development approaches are utilised within the organisation Good and clear understanding of the market demographics which enables the organisation to understand the consumer needs better. Weakness Losing a great level of the current market share due to the existence of other products which are being developed by competitors. Declining levels of sales into the international market Increasing costs of advertising and marketing which could affect the profit margin for the organisation. Opportunities The ever expanding global market for cosmetics as many individuals realise the benefits of the products. Large untapped market for beauty products especially among the mid-level income individuals within many countries globally. The export potential of expanding into many more countries in the overseas market for cosmetics Threats The ever rising cost of raw materials due to the economic inflation around the world The continuously increasing competition from other firms in the industry like Nars and Bobbi brown. Presence of unbranded products within the market, which are cheap and more readily available The regulations within different countries regarding ingredients of various cosmetics Competition Competition has been defined as the existing rivalry between sellers of similar products in seeking to achieve goals like market share, increased profits through changing the elements of the marketing mix. The cosmetics market remains one of the highly competitive markets globally. As the company becomes unable to compete effectively within the market, the business prospects and the financial condition of the company operations would be significantly harmed. MAC cosmetics continues to face competition within the market for product recognition and market share as well. Many of the products have achieved significant level of brand recognition nationally and internationally. MAC cosmetics is the leading brand of cosmetics in the industry and continues to face stiff competition from other companies like Bobbi brown and Nars. Both of these companies have provided the market with beauty products which have captivated the market in terms of quality. MAC has managed to overcome the impeding challenge from competitors through the pricing strategy, where most of their products are relatively lower in price. The company has utilised pricing in gaining the current market share at the global market as well (Porter 2004). The company has continuously utilised advertising, pricing, demographic trends and the economic conditions in undertaking effective marketing for its products. This has been the main reason for the competitive advantage gained within the market. New product Idea In seeking to ensure the company remains competitive within the market, there is need to continuously introduce new products aimed at satisfying the needs of the consumers. The organisation undertakes extensive market research to determine the existing gaps in the markets, in order to develop product ideas (Baker & Hart 2007). The concept of the new product line is then tested to determine the gap which the product will be filling and the capacity to fill the customer needs. After the concept testing the product will be subjected to business analysis in seeking g to evaluate how the product will perform in the actual market. Business analysis is conducted with the purpose of establishing the returns on investment. This involves estimating the level of sales which will be achieved once the product has been introduced into the market. The business aspects of the product including distributions and marketing approaches are analysed to determine the methods which will be used when launching the product in the market. After the business analysis of the products has been conducted, the development of the product becomes the next step in the process. The product is designed in accordance to the analysis which have been undertaken to determine how the product will be able to fill the existing gaps in the market. The product is developed in the appropriate design and then lanced into the market to be sold. The product which is being designed is then subjected to market testing to establish how the product will perform in terms of sales when introduced to the market. At this stage, the product can be discontinued if it does not yield the expected returns in sales volume. The testing process ensure the organisation does not introduce products which fail in the market (Shaw 2012). This has been a key element which has resulted in the continued success of Mac products. Once the market testing is completed the product is commercialised in seeking to develop a brand which will be marketing the products. Marketing efforts are initiated during the commercialisation stage which marks the maturity of the product which has been launched. Marketing objectives The company will have to develop marketing objectives which will be utilised as the guidelines aimed at ensuring the marketing targets are met (Moutinho & Chien 2007). The objectives will also be the used in determining the way the products will be distributed into the market. The following marketing objectives can enable the company to achieve a competitive advantage within the market Providing free product sample to the various selected markers of the products which the company sell within the different markets. Providing of products which will be able to generate a brand equity following the launch To ensure that the current products are developed into strong brands in the near future Marketing Strategy Marketing strategy can be defined as the goal which seeks to increase sales and achieve a sustainable competitive advantage for a product. It includes both long-term and short-term marketing activities aimed at analysing the market situation within the company (Ferrell & Hartline 2012). The marketing strategy enables the formulation, selection and evaluation of marketing objectives and goals; hence contributing to the achievement of a competitive advantage. The organisation has adopted a marketing strategy based on the market dominance. Other organisation is the market leader within the industry as it holds the largest market share. Mac cosmetics has a wide coverage of the market as the products are marketed to both individuals and organisations. When the company was conceived, it focused mainly on make-up for professionals. This involved making products targeting make-up artists who provided much of the business for the company. The company has however changed this approach and began focusing of women of different backgrounds and individuals form a wide range of demographic reach. The company has however remained focused on providing beauty products meant only for women. The company has utilised a demographic approach which uses age to determine the target clients for the products. Segmentation, targeting and positioning Market segmentation has been extensively utilised in popularising new products. The company has segmented the target clients into four categories which include young women aged between 18 and 25, career women, professional make up, and make-up artists which follow the market trends for cosmetics. The element of consumer segmentation which the company has adopted in the new product development has ensured that the products meet the needs of the target consumers. A psychographic approach to market segmentation was initially adopted by the company through selling products of professional make-up artists. This created a target market for the upper class of individuals who are mainly the trendsetters within the fashion industry. This approach makes the company to be perceived as the global provider of the best quality cosmetics due to their association with celebrities. The organisation has identified the core demographic market upon which to provide products based on the segmentation of the current market (Hooley et al. 2012). The organisation will be able to position the products according to the various demographics of the company customers which have been established. This position enable the development of brands within the market. Reference Axarloglou, K., 2007. 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